Dear Subscriber

EPPF ANNOUNCE UNLISTED INVESTMENT INCUBATOR

Eskom Pension and Provident Fund (ldquoEPPFrdquo)recently hosted a breakfast to share their findingsof a study they commissioned through SelekaneAsset Consultants on the state of transformationin the South African (ldquoSArdquo) financial servicessector The EPPF is undoubtedly leading theway in transformation boasting award-winningcredentials that have led them to receiveaccolades such as the ABSIP awards

The Eskom Chair CEO and CIO spoke extensively on how Eskom has embraced the support of blackmanagers as part of their core strategy which has contributed positively to achieving superior returnsabove their targets They also drove home their ongoing commitment to drive transformation in the SouthAfrican financial services industry The EPPF have set aside R2bn in a new mandate to supportalternative fund managers who are more than 51 black-owned emphasising the establishment anddevelopment of female-owned fund managers In keeping with past trends this new initiative will not onlysupport the manager but also ensure the transformative impact moves along the entire value chain Weapplaud the EPPF for their commitment to growing black managers and for leading the industry intransformation

Together with the Eskom team we bid a farewell to Mr Sbu Luthuli the outgoing Principal Officer andCEO of Eskom Pension and Provident Fund Under his leadership EPPF grew from R50bn to R140bn inAUM and has been a decisive driver of transformation Mr Luthuli has been a voice for black excellenceand transformation while also being an avid supporter of unlisted investments and their potential to drivegrowth and portfolio performance We wish him well in his future endeavours and look forward tocontinued engagement with him in the next phase of his career

We also congratulate the incoming CEO Ms Nopasika Lila on her appointment We look forward to hertenure as CEO and believe EPPF will continue to grow in leaps and bounds with her at the helm

NO FURTHER DOWNGRADE FOR SOUTH AFRICA

Moodys recently announced their revised outlookfor South Africa from negative to stable endingthe downgrade review that had begun in

statement Moodys indicated The confirmationof South Africas ratings reflects Moodys viewthat the previous weakening of South Africasinstitutions will gradually reverse under a moretransparent and predictable policy framework

The recovery of the countrys institutions will if sustained gradually support a corresponding recovery inits economy along with a stabilization of fiscal strength

The stable outlook reflects a careful balance of risks The new administration faces equally significantopportunities and challenges Steady progress in meeting the objectives set out in the Presidents recentState of the Nation Address (SONA) will be needed if the recovery in confidence that will be essential forthe countrys economic and fiscal prospects is to be sustained Success offers the prospect of a virtuouscircle of economic recovery fiscal consolidation and rising social cohesion But the political policy andpractical challenges of meeting diverse economic social and fiscal objectives cannot be underestimatedFailure at least as perceived by investors or voters could lead to a further cycle of eroding economic

fiscal and institutional strength

These remarks echo the public sentiment that the key to continued growth and development is the need toaddress the social and economic issues that plague South Africa

In line with this imperative Summit Africa actively pursues a strategic mandate that seeks to redresshistorical injustices and inequalities We invest in opportunities that deliver superior returns and focus onyielding the desired socio-economic upliftment for the majority of the population through targetedinvestments in the second cities and other historically marginalised areas

Not only do our investments focus on creating new jobs but also look at improving the quality of lifethrough the delivery of affordable solutions in healthcare education financial services (and financialinclusion) and ICT through the Summit Private Equity Fund and Summit Real Estate Fund For moreinformation on the funds please visit our website wwwsummitafricacom

VAT GOES UP AS INTEREST GOES DOWN

In SA Personal Income Tax Corporate Tax andVat account for the majority of the incomecollected by Government and it was these areaswhich the then outgoing minister of finance(Minister Malusi Gigaba) sought to meet the ever-increasing demands of the countryrsquos expenditureWe believe the government took a bold but

necessary step in their decision to raise Vatwhich has not increased since 1993 for thefollowing reasons

gtgt Recognising the steady and almost consistent hikes on Personal Income Tax in a country where only

gtgt The Corporate Tax rate was retained at 28 When compared with SArsquos predominant trading partnerssuch as the US (which has reduced its rate from 35 to 21) the UK (reduced from 30 to 19) andChina where it is 25 SA is an outlier Because global trends have been in the direction of loweringCorporate Tax a move to increase this tax would have had an impact on the competitiveness of SouthAfrica on the world stage

gtgt An increase in Vat from 14 to 15 (effective from 1 April 2018) was therefore the most prudent wayto finance the increasing demands on government

We also believe the zero-rating of certain goods to cushion the impact on the poor was a positive andnecessary step However we still think there remains scope for the government to include additionalgoods such as sanitary pads in this zero-rating to further alleviate the impact of the Vat increase

In contrast to the increase in Vat the South African Reserve bank announced a reduction in the interestrates by 25 basis points

The governor of the central bank noted at the last meeting of the Monetary Policy Committee that the risksto the inflation outlook have somewhat subsided ldquoThe Rand has reacted positively to domestic politicaldevelopments in the past months and was given further support following the recent sovereign creditrating announcementrdquo Kganyago said ldquoThe risk of a significant sell-off of South African governmentbonds by non-residents has therefore receded for now Further support for the rand comes from recentdollar weaknessrdquo He also indicated that a significant external risk to the Rand remains because of thepossibility of a tighter-than-expected stance of monetary policy in the US in particular

The cut in rates will provide relief to under pressure consumers with the VAT hike in the next few days ahike in the petrol price as well as the introduction of the sugar tax

WE WERE EPIC IN THE CAPE

Well done to Potlaki and Dudu from the SummitAfrica team for successfully competing in theCape Argus and the Two Oceans Marathonrespectively We admire their commitment anddedication to healthy living and the sheerdetermination it takes to complete these physicalfeats of human endeavour

LANGA MADONKO

Authorlangasummitafricacom

We experienced a technical problem when sending this email on the 18 April and are resending the emailto everyone who did not seem to receive it We really care about our relationship with you and apologizeif you are receiving it for the second time

RegardsLanga

Summit Africa 3rd Floor One Vdara Towers 41 Rivonia Rd Sandhurst Johannesburg South AfricaPhone Number +27 10 880 1812 email infosummitafricacom

www summitafricacom

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